Vessel Navigation and Traffic Services for Safe and Efficient Ports and Waterways: Interim Report (1996)

The Coast Guard's VTS-2000 program originated in response to a congressional mandate following the 1989 Exxon Valdez accident and subsequent oil spill in Alaska. The purpose of the program was to develop a national system for VTS that would be funded and operated by the federal government to enhance safety and environmental protection in key U.S. ports and waterways. The basis for selecting and establishing priorities among the 17 ports slated to receive new or upgraded VTS systems was a study ranking ports based on hypothetical oil spill accidents that could be avoided with an operational system. Since 1993, the Coast Guard has consulted with local port and shipping interests, established requirements for the system, and made plans to contract for initial design services. Efforts to date have constituted a sound, professional response to the original mandate.

But the context in which the plans for VTS-2000 are being carried out has changed. Efforts to reduce the federal budget and the role of the federal government in commercial activities now dominate the national agenda. Many people now advocate shifting responsibility for programs like VTS from the national to the state and local levels. These changes in priorities have prompted the administration and the U.S. Congress to question the extent of the VTS-2000 program, its cost effectiveness, and the viability of full federal funding. Private VTS-like systems supported by local user fees have been held up as alternative models. Debate over these issues is impeding efforts to move forward with VTS-2000. This chapter presents a rational approach based on committee deliberations to date to the problems surrounding implementation of VTS-2000; the broader topics of waterways management and maritime information systems in general will be addressed in the committee's final report.

Given the importance of ports and waterways to U.S. trade and prosperity, and the persistent risk of maritime accidents involving casualties and environmental damage, there is significant public interest in ensuring the safety and efficiency of maritime transportation, both to promote both economic growth and to improve or maintain quality of life. The public interest is recognized through the Coast Guard missions addressing port safety and security, maritime law enforcement, and search and rescue operations. The committee concludes that there is a compelling national interest in protecting the environment and in providing safe and efficient ports and waterways. This interest serves the purposes of ensuring national security, enhancing public safety, facilitating commerce, and fostering environmental protection. The public interest in safety and environmental protection is especially important. Efficiency, which is of some national interest economically, may be of greater concern to the commercial sector.

Many factors contribute to the safety and efficiency of maritime transportation. Chief among them is the availability of accurate and reliable navigation information. Decades of nautical experience have shown that certain types of information are essential to individual vessels navigating ports and waterways, while other types of information are needed when multiple vessels converge. The committee concludes that environmental protection, safety, and the efficiency of ports and waterways depend on the accuracy and availability of traditional and advanced navigation aids, nautical charts, and real-time hydrographic and meteorological data. When multiple vessels are involved, safety and efficiency also depend on effective waterways management, adequate electronic communications, and local knowledge of the kind usually supplied by pilots.

Although few quantitative data are available for gauging the adequacy and availability of navigation information nationwide, anecdotal evidence gathered by the committee indicates that there are gaps in deployment and that U.S. ports and waterways have deficiencies ranging from outdated charts to a lack of real-time hydrographic data. The committee concludes that there are deficiencies in the accuracy and availability of many essential types of navigation information provided by federal agencies.

VTS can enhance maritime safety and efficiency by collecting and managing the most reliable navigation information, monitoring and evaluating vessel traffic and potentially

dangerous traffic situations, and providing accurate and timely information to mariners. When dangerous situations arise, the Coast Guard has the authority to impose traffic controls in areas covered by VTS to protect lives and prevent accidents and pollution. The Coast Guard currently operates VTS systems in eight ports. In these ports, VTS users are generally satisfied and recognize the safety benefits. Although it is difficult to quantify all of the benefits, ample anecdotal evidence indicates that VTS is beneficial in terms of averting accidents and cargo spills and supporting Coast Guard missions. The committee concludes that VTS can be a significant factor in enhancing port and waterways safety and efficiency when used in conjunction with other traditional aids to navigation and hydrographic and other information. The national benefits derived from safe and efficient ports and waterways are substantial, as is the contribution of VTS systems to safety and efficiency. Therefore, the committee concludes that the implementation, function, and role of VTS systems are integral to the Coast Guard's federal mission of safeguarding the nation's ports and waterways.

And yet, as has been noted, seven years have passed since the accident that precipitated planning for VTS-2000, and the political context has changed. Whereas once there was substantial momentum behind the program, today there is skepticism, not only in the Congress but also among local port and waterways users. Although the Coast Guard has yet to develop specific VTS-2000 designs for any one port complex, and therefore no reliable cost estimates are available, many users are concerned that the scope and cost of their local system may be too great. Concerns about costs seem to be related to apprehension about the possibility of having to pay user fees. In addition, despite the Coast Guard's outreach efforts, many port and waterways users seem to feel they have not been consulted adequately about the needs for local navigation information. The committee concludes that the process used to date to develop VTS-2000 in various ports and waterways was established in a different political atmosphere than exists today. The suggestion of possible user fees has changed the attitudes of waterways users toward the perceived scope and costs of VTS-2000. Progress now depends on greater understanding and developing partnerships among federal agencies and port and waterways users at the local level.

Private support has been suggested as a means of reducing federal costs for VTS-2000. The existence of some private VTS-like systems, known as vessel traffic information Services (VTIS), notably in Los Angeles/Long Beach (LA/ LB) and Delaware Bay, shows that using revenues from user fees is feasible and can be accepted by the local maritime community under certain circumstances. A key requirement for acceptance is local control or involvement. However, the LA/LB and Delaware Bay models may not be applicable to other ports, primarily because the amount of revenue from user fees and the willingness to pay could vary significantly. Fees elsewhere probably would be established based on the total cost of the local VTS or VTIS system, divided by the level and type of vessel traffic, and both factors would vary substantially from port to port.

In regional ports that cover large geographical areas, where extensive VTS systems would be required to serve relatively light vessel traffic, fees might be very high—potentially affecting the competitiveness of operators of smaller vessels, such as U.S.-flag tugs and barges. Conversely, in compact ports that require only small-scale VTS but serve heavy tanker traffic, fees might be relatively low and acceptable to international tanker operators. Reasonable fees also may be accepted by other deep-sea ship operators. In some cases, the imposition of user fees might influence a vessel operator's choice of ports. The committee concludes that port-specific fees may significantly affect the domestic and international competitiveness of certain ports. User fees imposed to pay for VTS/VTIS systems will be affected by the capital and operating costs of the system, which would differ widely from port to port depending on geography and port-specific needs.

Existing VTIS systems also have some operational limitations compared to Coast Guard-operated VTS systems. First, most VTIS systems are limited in scope and geographical coverage (the LA/LB and Delaware Bay systems cover only harbor entrances). Second, unless the Coast Guard is formally involved in VTIS operations, system operators lack the authority to intervene in emergencies. Third, private VTIS operators whose advice might be implicated in an accident are not automatically protected from liability; thus, they may be reluctant to assume certain responsibilities. This is a particular concern to local pilots, who can be valuable to VTIS operations. Fourth, national standards have not yet been developed for VTIS systems. Vessel operators and masters need the consistent coverage, accurate information, and reliable equipment that standards can provide. The committee concludes that there are major impediments to nonfederal development of VTIS systems. These impediments include the significant capital needed to acquire and install VTIS systems and the potential liability inuring to private operators. The uniformity and consistency of systems should be ensured through federal standards.

Given the difficulty of implementing VTS-2000 in a cost effective and timely manner while also meeting the myriad needs of local users, it may be useful to consider ways to reduce front-end costs and implement the program in stages. After careful consideration of port-specific needs through continued Coast Guard outreach with local stakeholders, the current list of 17 ports could be divided into two categories. The high-priority group could include ports with the greatest safety needs that could best be satisfied by VTS. This group might include four to six ports, roughly equivalent to the four ports scheduled to receive VTS by the year 2000 and the three scheduled for 2001. The actual number would depend on the results of the Coast Guard 's ongoing re-evaluation

of the current, specific needs of each port. The second group could include ports with lesser needs where VTS, or perhaps some other, more appropriate navigation information system, could be implemented at a later date.

This approach might reduce overall capital costs of VTS-2000 by (1) eliminating one or more low-priority systems from the original list of 17, (2) enabling the program to take advantage of technological advances that may reduce the need for expensive hardware, and (3) making the program more responsive to changing local needs. To support this approach and justify federal funding, there should also be an established minimum scope and service level of VTS to ensure safety, which is of greater interest to the public than efficiency. Such a baseline would have to be defined by the Coast Guard for each port slated to receive a VTS-2000 system and, to ensure minimum safety levels nationwide, for each existing VTS and VTIS system. The committee concludes that local institutions, in partnership with federal agencies, could introduce new VTS-2000 strategies. Acceptance of VTS-2000 could be promoted by shifting the Coast Guard 's focus to defining a generic baseline system to meet national safety needs and Coast Guard mission requirements.

Recommendation 1. The Coast Guard should take the lead in promoting public/private partnerships for the acquisition and operation of VTS in specific ports. Partnerships have already evolved in certain localities, and the Coast Guard has adequate experience working with the maritime community and other stakeholders to promote safety initiatives. Organizations like harbor safety committees already exist in some ports and could help develop partnerships.

Recommendation 2. The Coast Guard should use public/ private partnerships to establish local institutions to implement local VTS systems. These institutions should bring all parties together and establish specific requirements for each port. They must also seek acceptance from all stakeholders for specific designs, operational approaches, and funding schemes.

Recommendation 3. The Coast Guard should select ports with the greatest safety-related needs for VTS and define a minimum generic, baseline system that would meet national safety needs as well as Coast Guard mission requirements. A second group of ports should be selected for a phase 2 program, and a similar baseline system should be defined for them. Funding for both capital and operating costs for the baseline systems should be the responsibility of the Coast Guard and should be incorporated into long-range funding plans.

Recommendation 4. Each port, through a public/private partnership, should apply to the Coast Guard for enhancements beyond that generic system that would yield economic and other benefits. The application should include proposals for funding. Funding for enhancements should be the responsibility of local partnerships. Applications may also be used to justify or modify the priority status of a port.

Recommendation 5. The Coast Guard should examine existing VTS systems as well as private VTIS systems and identify the necessary enhancements for upgrading these systems to meet national safety as well as Coast Guard mission requirements. Upgrades required to meet national safety needs should be funded by the Coast Guard. Enhancements beyond the generic baseline system should be funded by local entities in the partnership.

The national interest in safe and efficient ports and waterways justifies federal funding for generic VTS systems that meet national safety needs and Coast Guard mission requirements, but the committee recognizes that full federal funding may not be possible in the future. If some private support becomes necessary, negotiations to determine cost-sharing formulas acceptable to local stakeholders may be the most appropriate and workable approach. The committee identified three general cost-sharing mechanisms that could be used as a basis for developing more specific formulas. Each mechanism would provide for both federal and local user funding, with specific shares to be determined by consideration of the relative benefits to be derived by each party. Some of the mechanisms would make use of existing institutions and authorities; others would require new authorities and, possibly, new legislation. All of them would require the establishment of local partnerships to facilitate implementation. Any one of the three could be selected and applied to fit a given situation.

The portion of VTS costs determined to be the responsibility of port users could be covered by either an existing or a new national trust fund. The trust fund would collect fees on a national basis from maritime operators based on some measure of port and waterways usage or cargo throughput.

Existing funds include the Oil Spill Liability Trust Fund (fees are collected from the petroleum industry for each barrel of oil produced or imported); the Harbor Maintenance Trust Fund (fees are collected on imports, exports, and domestic cargo); and the Aquatic Resources Trust Fund (fees are collected on the sale of motorboat fuel). One of these funds could be expanded, or a new trust fund could be established. Either approach would probably require legislation, at least to specify how local authorities could withdraw money for local projects.

The trust fund approach appears to provide for an equitable distribution of user fees, but in practice trust funds

have been difficult to administer, and many critics contend that fair collection and distribution have been compromised in the past and that such problems will persist. In addition, there is usually no guarantee that trust fund monies collected would all be appropriated by Congress for specific expenditures.

The federal government (i.e., the Coast Guard) could establish a new program to make grants to local ports for planning, constructing and operating VTS systems and other safety measures. The Coast Guard would probably require legislative authority to establish and administer a grant program. Grants would be available to ports first for planning and evaluating their needs and then for procuring and operating systems for which there was a demonstrated need. Local ports could apply for grants by providing information about how plans would be developed or how systems would be implemented, what local needs would be satisfied, and how much local funding (through user fees) would be applied. The grants would be completed through negotiations.

The federal government could endorse methods of collecting user fees to fund specific systems, following the methods currently in place in LA/LB and Delaware Bay. Government endorsement could involve mechanisms for providing federal assistance for specific projects (e.g., the government might provide the land and building for a vessel traffic center, as was done in LA/LB) and mechanisms for reimbursing the federal government for certain expenditures (e.g., a portion of user fee revenues could be used to reimburse the Coast Guard for VTS watchstanders, as is done at LA/LB). Methods of establishing local user fees could be chosen by each port entity, the way fees for other types of port and terminal services are now established. For example, the VTS fee at LA/LB is based on vessel length for certain categories of vessels. Fees could also be based on gross tonnage, as are some other port fees and canal fees. Whatever methods are adopted, it may be useful to consider establishing national guidelines to ensure some uniformity so maritime users could anticipate similar fee structures at all U.S. ports.